Frontier Market ETFs and New Access to Related Themes

Another ETF filing, with a hat tip to IndexUniverse.

WisdomTree has filed for the Middle East Dividend Fund that will include Bahrain, Dubai, Egypt, Jordan, Kuwait, Lebanon, Morocco, Oman, Qatar and the United Arab Emirates.

The prospectus has no info on country weightings (none that I found anyway), but surprisingly 54% of the companies have market caps greater than $2 billion.

WisdomTree has an awful lot of very interesting funds on the shelf that I'd love to see listed, but thus far have not. Some of the filings are so old now that I doubt they will list, so we'll see if this Middle East fund ever lists or not.

One thing seems pretty clear to me - frontier markets will open up to investors one way or another pretty quickly. PowerShares has a frontier fund in the works which takes in a few other countries, but given the role Middle Eastern countries and investment funds are now playing on the global stage, a narrower fund like the one WT filed for is inevitable, even if it is from another provider.

As I was working on this post the following comment came in on this morning's post that deserves a follow up:

I sure wouldn't attempt the kind of sophisticated trades that you're positing. For me, it's just enough to know that they're out there if I ever get to that point.

I mentioned the potential of trading the spread between platinum and gold or AUD/NZD. No argument from me on the reader's point. I would add though, that a dynamic exists between many different things like Oz and New Zealand. As it becomes possible to more easily trade off of these dynamics, people will submit articles to places like Seeking Alpha. And while you may never trade AUDNZD via ETFs, you might want equity exposure to Australia and understanding the dynamic might make you more knowledgeable about the country you own.

Now, apply that to other exposures in your portfolio - like maybe gold.

• More on choosing the right ETF

Comments

[NMundis:]

I was wondering how SPDR S&P Emerging Middle East & Africa ETF (GAF) fits into this space. I realize it includes some different countries than the Wisdom Tree offering, but still isn't it quite similar? Are the countires included in the SSGA offering considered mroe emerging markets than frontier markets? Thanks.

2008 May 09 04:04 PM

[Roger Nusbaum:]

GAF is 60% South Africa. Most folks don't think of SA as a frontier market.

GAF is 20% Israel. Israel is more tech while gulf states are more oil bases.

SA and Israel might be great or lousy, you decide that for yourself, but they capture different things

2008 May 10 06:47 PM

[NMundis:]

Okay, thank you.

2008 May 12 01:07 PM